Process Improvements
Perhaps the most impressive aspect of Drees’ operation is how a company with such veteran leadership understands the need to change and adapt and is using technology to drive process improvements, both for corporate managers of its many divisions and also field personnel. This is a company that takes how it does things seriously.
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Credit: Courtesy Drees Homes
Drees developed a program and designed software specifically to manage its field purchase orders, says Larry Herbst, vice president, secretary, and treasurer, and also the individual who started Drees’ information systems and helped develop many of its software systems.
“We were getting field purchase orders from subs, and we’d have like 45 of these a house,” Herbst says. “And nobody was analyzing these. Was this an estimating error? Why are we getting billed extra for this?”
But now the company can pinpoint the problem, save supplies, and keep its costs down. As a result, Drees sees lower costs and variances, fewer purchase orders, and supplies in the field are being used more efficiently.
Another successful Drees process, put in place 20 years ago and often called evenflow building, is building by predictability and scheduling, says executive vice president of operations and CFO Mark Williams. The idea, Williams says, is that subcontractors will never have to sit around on a jobsite and will want to work with Drees.
Teamwork: At left, Terry Sievers, president of Drees’ Midwest region, meets with vice president, secretary, and treasurer Larry Herbst (center) and vice president of human resources Effie McKeehan.
Credit: Chris Cone
“They will not show up to discover that the site is not ready, that the material isn’t there,” he says. “They can depend on us being on schedule, thus increasing their efficiencies and ultimately improving our pricing.”
That philosophy extends to slotting starts and land purchases as well and allowed the company to get out ahead of itself on land acquisition during the waning stages of the boom and into the downturn, Williams says. But Drees is actively working to move its land and has already sold some; and its position as a privately held company will allow it to do so without taking the public beating that many big national companies have.
Cost-Reduction Strategy
David Drees (center) talks to (l to r) Premier region president Dan Jones, vice president of national purchasing and operations David Metz, and vice president of production Jack Herbstreit.
Credit: CHris Cone
Drees has tackled value-engineering as well by drawing on relationships with its trade partners. Drees involves its trade partners along with its in-house architects in helping the company value-engineer its product and includes all parties on walk-throughs of a prototype of each new design.
“They will help identify where things can be changed to become more efficient and cause less problems,” Williams says. “Looking at the drawings is great, but seeing the drawings [come to life] improves the likelihood of detecting short-comings.”
Drees is not afraid to use technology to learn how to be more efficient. A software system from J.D. Edwards enables the company to view financial reports on a given home design, historically for a division, a city, or multiple cities.
Seeing that data clued Drees in to other inefficiencies. Why do identical faucets cost different amounts in different markets?
That insight led the company to seek national contracts, and already it is buying plumbing fixtures and putting them on site for plumbers to install, instead of allowing the plumbers to supply the fixtures.
More national contracts are coming for Drees, and more cost savings with them. The man in charge of cost reduction at Drees, David Metz, vice president of national purchasing and operations, is visiting all of Drees’ locations, identifying best practices, and implementing them where possible. Metz is also seeking national contracts to get better cost efficiencies.
And on top of all those improvements, Drees is spending more on sales and marketing than ever before. The company added a national sales director and a market research director under vice president of marketing Barbara Drees-Jones, David’s sister. Some new initiatives involve Internet marketing and working with outside advertising agencies to bring a fresh perspective in wooing customers.
One thing is certain with Drees, it never stands still and is never satisfied with the way things are. Operations at Drees are constantly under review and always improving.
“It’s an incredible transformation over almost 40 years,” says Jack Herbstreit, vice president of production.